Buying a foreclosed home is a high-risk, high-reward situation, and with 676,535 US properties being foreclosed in 20171, there are more than enough options for the interested buyer. A house is subject to foreclosure when the current owners are unable to pay their mortgage and the bank or investors buy the house back from them. Most foreclosed homes are then bought by investors or private parties with the intent of updating or fixing them, and flipping them back on the market for a higher price than they were purchased for.
Although prices are low and the profits that can be made from buying and flipping a foreclosed home can be attractive, there are some things to take into consideration before laying down your hard-earned cash, only to end up with a dud on your hands.
Always Research Before Purchasing
The majority of prospective buyers go into foreclosure auctions and sheriffs sales with the preconception that a foreclosed house is a bargain, and sometimes they are. Prices are dramatically reduced so that the banks can make back their investment quickly.
But don’t confuse a low price tag with a great deal; oftentimes the owners can’t keep up on paying the mortgage before their property enters foreclosure. In that respect, home improvements and upkeep are also most likely near the bottom of their list, resulting in an outdated or substandard home.
In short, be sure to do your research and be prepared to deal with any repairs or upkeep that may have been neglected by the previous owners or the bank. Your time to research will be limited before an auction, so ordering a chancery abstract is usually a viable solution to get the most pertinent details on the foreclosed property before putting down an offer.
What Is a Chancery Abstract?
A chancery abstract is an official document prepared by a trusted public search record service that shows pertinent information pertaining to the foreclosure on a property. Chancery abstracts contain extensive details about the court ruling, parties involved and the property in question. Apart from pointing potential buyers to parties they may want to contact, chancery abstracts provide notes on irregularities found in the foreclosure process with creditors and debtors.
Chancery abstracts are always a crucial part of any research concerning a foreclosed property’s details; it helps potential buyers identify why the house was foreclosed on in the first place, and any subsequent issues that they should expect as a result, including irregularities found with the foreclosure and other fees that are factored into the property’s price.
Be Aware of Outstanding Expenses and Repairs
Another thing to keep in mind when considering whether or not to buy a foreclosed property is the repairs that will most likely be necessary. As stated previously, if a owner isn’t able to keep up on the payments of the home, the chances that they were keeping up on costly repairs and upkeep to the property are fairly low. In that respect, it’s important to seek the services of a trustworthy contractor who can help identify other issues after the initial inspection of the property.
There may also be outstanding expenditures associated with the foreclosed property in the form of court expenses or other miscellaneous costs that are attached to the property as a result of the foreclosure. Again, a chancery abstract is an excellent resource to shed light on any additional expenses that could exist and be included in the cost of the foreclosed property.
The cardinal rule of buying a foreclosed home or property is research, research and then more research. Spending time investigating a foreclosed property, the context surrounding its foreclosure and any upkeep or repairs that have to be made is the difference between a profitable investment and ending up with a dud that takes more time, effort and funds than you’re willing to invest.
Need a chancery abstract for your next foreclosure purchase? Contact the most trusted public records search service in the industry since 1925.